Yahoo Finance This algorithm can predict which suburbs will go off, and its founders are betting thousands on it
It’s one thing to create an algorithm that can predict which Australian suburbs are set to boom, and for how long. It’s another thing to bet your own money on it.
But that’s how confident TUDI co-founders Julien Mougenot and Joseph Amoia are about their newly launched AI-powered property investment tool.
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The two co-founders have purchased property in Moranbah based on the tool, which has gone live after three years of development with the SMART Infrastructure Facility at the University of Wollongong.
Since purchasing the Moranbah property for $210,000 in 2017, it’s grown in value by 56 per cent and delivered a 9.4 per cent rental yield over a period when the national price index fell 8.3 per cent.
Now, the algorithm has indicated that this is a good time to sell the Moranbah property.
Across TUDI’s virtual portfolio, the properties have seen an overall return of 33 per cent since inception in September 2017 - majorly outperforming the national price index.
● Branxton, NSW – Growth of 51% over 23 Months (Sept 17 - August 19)
● Nickol, WA - Growth of 40% over 21 months (Sept 17- June 19)
● Newcomb, VIC - Growth of 33% over 17 months (Sept 17 - Jan 19)
● Glenorchy, TAS - Growth of 30% over 21 months (Sept 17 – June 19)
● Moranbah, QLD - Growth of 25% over 19 months (Sept 17 – Mar 19)
But, Mougenot and Amoia are quick to say, TUDI is far from a silver bullet for property investment. Rather, it’s a tool property investors should use to find the ‘where’ and the ‘when’ for investing. Then, it’s up to investors to figure out the ‘why’ of that particular suburb.
The co-founders are also quick to distance themselves from any suggestion that TUDI throws up a shopping list of suburbs to invest in, describing it as a partner to investors looking to identify and monitor suburbs of interest, before going on to perform that deeper research.
“The property market is like any other commodity, it's supply and demand,” Mougenot told Yahoo Finance.
“So if you can accurately predict the supply and the demand, and how quickly your demand is increasing against your supply, you can fairly accurately pick the best time to buy. And vice versa: when you see a reverse trend in supply starting to increase quicker than demand, that's a good alert [that you should sell].”
The two hope that the tool, which taps into five main metrics including supply and demand, seller confidence and rental yield, will help shift the property investing conversation away from buy and hold strategies, to one which places more value on when to buy - not just where.
To use the tool, investors will highlight the metrics they care about the most in certain regions to see which suburbs are performing well, and which suburbs are performing well on the highest number of metrics.
Amoia said most indicators have a three to six month lead time, allowing buyers and sellers to perform their due diligence.
“What we found when we were looking at past data is that most of the growth can be achieved within two or three years, so you don't have to wait 10 years to maximise your return on property, you can achieve this over two to three years,” Mougenot added.
“But you have to time it right, and that's what is at the core of our technology. It's not only telling you where, but telling you when to buy and also when to sell.”
The future of work will be discussed at the Yahoo Finance All Markets Summit on the 26th of September 2019 in the Shangri-La, Sydney. Check out the full line-up of speakers and agenda for this groundbreaking event here and buy tickets here.
